Here we use fMRI to determine the neural correlates of a recently discovered visual illusion that we call ‘illusory rebound motion’ (IRM). This illusion is remarkable because motion is perceived in the absence of any net motion energy in the stimulus. When viewing bars alternating between white and black on a grey background, the percept alternates between one of flashing bars (veridical) and the IRM illusion, where the bars appear to shoot back and forth, rather like the opening and closing of a zipper. The event-related functional magnetic resonance imaging (fMRI) data reported here reveal that (1) the blood oxygen-level dependent (BOLD) signal in the human analog of macaque motion processing area MT (hMT+) increases when there is a perceptual change from “no IRM” to “see IRM,” and decreases when there is a perceptual change from “see IRM” to “no IRM,” although the stimulus remains constant; and (2) the BOLD signal in early retinotopic areas (V1, V2, and V3d) shows switch-related activation whenever there is a perceptual change, regardless whether from IRM to no-IRM or vice versa. We conclude that hMT+ is a neural correlate of this novel illusory motion percept because BOLD signal in hMT+ modulates with the perception of IRM.